Twilio vs. Palantir Stock: Why Investors Are Rethinking PLTR and Setting Their Sights Beyond Palantir in the AI Software Boom

TradingKey - Palantir Technologies (Palantir, PLTR) is one of the most controversial stocks on the market when it comes to investing in artificial intelligence. The Palantir stock price surge has made the PLTR stock a market darling and the searches for “ is PLTR a buy ” or “Palantir stock price prediction 2026” show hostoicw much hype this company is able to generate. Still, with Palantir stock trading at historically high valuation levels, more investors are starting to ask a slightly different question: where is the next leg up in AI software likely to come from, and might that be an even less obvious name than it already seems to be?

Twilio (TWLO) is one name that is creeping into that conversation: the cloud communications and customer engagement platform is quietly riding the same AI adoption wave – albeit without anything like Palantir’s valuation multiple. The difference between the two companies signifies a broader change in market perceptions of what growth, profitability, and longer-term opportunities in AI software really mean.

The AI software boom and two very different market darlings

Palantir is at the heart of the generative AI narrative. Its Artificial Intelligence Platform (AIP) is the de facto platform for governments and enterprises which want to run AI at scale, and it has led to an extraordinary run in PLTR stock. Having rallied approximately 150% in 2025, the Palantir stock price now incorporates massive expectations for growth, margin expansion, and market dominance.

Twilio, meanwhile, sits in a less glamorous corner of the AI world: communications infrastructure and customer engagement. Its APIs enable companies to engage with customers via text, voice, email, and chat without building traditional contact centers. In fact, many of those services now come with AI-powered analytics, recommendations, and conversational agents, making Twilio a rather subtle end user of the same enterprise AI spending spree that is boosting Palantir’s growth.

The difference is that Palantir stock trades at valuation multiples that imply near-perfection, while Twilio is priced as a more run-of-the-mill software company — albeit with obvious signs that AI is accelerating its growth once more.

Palantir’s fundamentals are amazing, but that’s a really high bar

Palantir is, from a business standpoint, exactly what its investors wanted. The company’s adjusted operating margin has more than quadrupled to 51% in the most recent quarter. Revenue growth has sharply picked up again, and margins-inclusive, Palantir’s software-investing key metric “Rule of 40” score has jumped to three-digits, which makes it one of the best, if not the best, large software company globally.

Customer momentum continues to be strong. Total customers increased 45% year-over-year, and new contract value was $2.8 billion in the most recent quarter, a more-than-doubling year-over-year. Enterprises typically grow their use of AIP after initial deployments, so increasing backlogs indicate a solid revenue pipeline.  Meanwhile, the global AI software market is expected to grow from around $126 billion in 2025 to nearly $400 billion by the end of the decade, providing Palantir with a massive addressable market.

It’s all part of the reason why numerous investors are still bullish about the Palantir share price and continue to forecast high Palantir stock price prediction 2030 scenarios. The issue is not the business—it’s the valuation. PLTR stock now trades at several hundreds of times trailing earnings and more than 100 times earnings forward, multiples that leave very little room for disappointment. Even Wall Street’s median target infers relatively limited upside potential in the near future, indicating that a fair amount of the good news is already baked into the Palantir stock price.

Twilio’s AI pivot is starting to show up in the numbers

While Palantir has been dominating headlines, Twilio’s transformation is taking place in a quieter but increasingly quantitative manner. AI is embedded in the company and its platform, enabling customers to leverage predictive analytics, personalized large language models, and conversational agents to enhance their marketing, sales and service operations.

That transition is impacting customer behavior in measurable ways. Active customer accounts have recently grown over 20% year over year, a stark acceleration from the low single-digit growth a year prior. Just as importantly, they’re making existing customers spend more: Twilio’s dollar-based net expansion rate has moved back above 100%, suggesting that the average customer is using the platform more, rather than less.

Cross-selling is emerging as a significant growth contributor. More than one-fifth of Twilio’s customers now have access to more than one product, a number that continues to rise as AI capabilities make the platform an increasingly critical part of customer engagement strategies. Financially, this is translating to a return to robust growth with revenue increasing at a mid-teens rate and earnings growing at an even faster pace.

A big and expanding market with potential for share growth

Twilio (TWLO) is a player in the Communications Platform-as-a-Service (CPaaS) space, which is anticipated to grow at around 20% per year well into the next decade. Analysts believe the industry could grow from around $20 billion in the mid 2020s to over $100 billion in the early 2030s, with AI-enabled automation and personalization being major growth drivers.

Even now, Twilio commands a large chunk of that market. If AI usage enables it to gradually capture a larger slice of the pie, its revenue base could grow tremendously. What distinguishes the two for shareholders is how that potential is being priced. Twilio is trading at a fraction of the sales multiple that Palantir commands, even though it too operates in a market that looks very compelling from a long-term growth perspective.

In other words — where PLTR stock is valued for almost perfect execution, Twilio’s valuation implies that it still has plenty of room to improve its business and expand its multiples.”

Two routes to exposure in AI, two very distinct risk profiles

Palantir is likely to grow even faster than the AI software market as a whole – there’s a strong argument for that. Its government and large enterprise positioning and margin expansion and growing contract backlog make the prospects look bullish for the Palantir share price in the long-term. If you are an investor who cares only about the quality of the business you’re getting, PLTR stock still has one of the most compelling narratives in enterprise software.

Nevertheless, the risk/reward is no longer as clean as it was. The higher the Palantir stock price rises, the more sensitive it becomes to any slowdown in growth or any suggestion that margins might flatten. It does not mean a correction is about to happen, but it means gains could be more difficult and more volatile.

Twilio presents a somewhat different case: you get exposure to the same AI-driven enterprise spend cycle, but through a company that’s still largely in an early stage of its marked reacceleration, and is priced a lot more conservatively. Should its AI initiatives continue to lead to customer acquisition, increased spending per account, and growing profitability, the potential upside from both earnings growth and valuation normalization is significant.

What investors should remember

For the time being, the answer to “is PLTR a buy” or to the question under your breath or whispered in online chat rooms of “Palantir stock price today per share” seems more and more dependent on how long you plan to hold it and how much risk you want to take on. Palantir is still a great company, and long-term Palantir stock price prediction 2025 and beyond could still make sense. But now the stock is a premium asset priced for exceptional performance, not a value stock.

Meanwhile, the AI software boom is much bigger than one company. Twilio is an example of how some second-order winners of AI adoption might provide a better growth/valuation balance. In an environment where enthusiasm has driven some leaders to extreme multiples, the answers for the next big wave of returns could be companies in the earlier stages of their AI-driven growth story, rather than those that are already priced as unequivocal champions.